2005 (9) TMI 462 - AT - Customs

Importer - De facto importer - Proof of - Valuation - Statement - Recording of - Demand - Evidence - Co-accused - Evidence

Summary

Issues Involved: Misdeclaration of value of imported goods, demand for differential duty, liability of goods to confiscation, and liability to penalty under the Customs Act.

Issue-wise Detailed Analysis:

1. Misdeclaration of Value of Imported Goods:
The Commissioner of Customs held that the appellant, Shri Manharlal Vora, was the real importer of goods cleared under 12 bills of entry filed by Deep Corp. and Niki Traders. The Commissioner determined that these entities were fronts set up by Vora to import bearings and bearing housings at grossly undervalued prices. The value declared in the bills of entry did not represent the actual transaction value, which was indicated in the invoices issued by D.V. International (H.K) Ltd. to Deep Corp. and Niki Traders.

2. Demand for Differential Duty:
The differential duty was demanded from Vora, identified as the de facto importer, despite the bills of entry being filed by Deep Corp. and Niki Traders. The Commissioner confirmed the demand for differential duty of Rs. 81,32,836.56 from Vora under Section 28 of the Customs Act. However, the appellants argued that the Commissioner erred in holding Vora as the importer, citing various case laws where the concept of de facto importer was rejected. The Tribunal agreed with the appellants, stating that the documentary evidence (bills of entry, invoices, bills of lading, bank transactions) established that Niki Traders and Deep Corp. were the importers, and the demand for differential duty should have been confirmed on them.

3. Liability of Goods to Confiscation:
The Commissioner held that the grossly undervalued bearings and bearing housings were liable to confiscation. However, the Tribunal found that the findings based on the statements of co-accused and retracted statements could not be sustained in the absence of supporting evidence. The origin of the seized documents, which were used to allege undervaluation, was questioned by the appellants, and the Tribunal noted discrepancies in the documentation and the panchnama.

4. Liability to Penalty under the Customs Act:
Penalties were imposed on Shri Vora, his manager Ashwin Mehta, and his son Shalin Vora. The Tribunal, however, set aside these penalties, stating that since Vora was not the importer in law, no penalty was imposable on him under Section 112(a) of the Customs Act. The Tribunal also observed that there was no charge of abetment against Vora, and the show cause notice did not bring out that he dealt with goods liable to confiscation. Consequently, penalties on Shalin Vora and Ashwin Mehta were also set aside, as their statements against Vora could not be used against them.

Conclusion:
The Tribunal allowed the appeals of S/Shri Manharlal Vora, Shalin Vora, and Ashwin Mehta, setting aside the penalties imposed on them and holding that the demand for differential duty should have been confirmed on the actual importers, Niki Traders and Deep Corp., who were not in appeal before the Tribunal.